Bonterra Energy – 2025 outlook

[Petroleum economist]

CALGARY, AB, Dec. 12, 2024 /CNW/ - Bonterra Energy Corp. (TSX: BNE) ("Bonterra" or the "Company") is pleased to announce its 2025 preliminary budget, and an operations update.

PRELIMINARY 2025 BUDGET1: MAXIMIZING FREE FUNDS FLOW5
Following a pivotal year in 2024, during which Bonterra added depth and quality to its drilling prospects through land acquisitions and experienced exploration success in both the Charlie Lake and Montney plays, the Company's Board of Directors (the "Board") has approved its 2025 preliminary budget (the "Budget") along with the associated guidance outlined below:

Approved capital expenditure range of $65 million to $75 million, fully funded by internally generated funds flow;
• Annual average production expected to maintain production levels of 14,600 and 14,800 BOE per day, weighted approximately 52-54 percent to oil and liquids;
• Funds flow expected between $108 million to $112 million ($2.89 per share3 to $3.00 per share);
• Free funds flow5 of approximately $32 million ($0.86 per share3) generating approximately 26% Free Funds Flow Yield4; and
• $8 million allocated to abandonment and reclamation obligations ("ARO") in 2025.

MANAGEMENT COMMENTARY
"Building on Bonterra's successful execution within its new Charlie Lake and Montney plays in 2024, we are pleased to have established a second core area in the Charlie Lake and an emerging resource play in the Montney, toward which capital will be allocated in 2025 and beyond. The approved Budget, which includes $65 million to $75 million in capital expenditures, is designed to maximize Free Funds Flow in the prevailing commodity price environment through strategic capital allocation across the Company's two core areas," said Patrick Oliver, President and CEO of the Company.

"While continuing to prudently develop our high-quality, oil-weighted asset base, we intend to focus on debt repayment in 2025, a key initiative in supporting our ultimate goal of implementing a sustainable return of capital to shareholders," added Mr. Oliver.

BUDGET AND GUIDANCE DETAILS
The 2025 Budget is structured to generate meaningful Free Funds Flow5 through focusing on the most economic projects in the Cardium, and strategically investing in further development of our Charlie Lake play. While the Company remains committed to establishing a long term and sustainable return of capital to shareholders, timing for implementation of a share buyback or dividend is largely dependent on the Company achieving its net debt target of $135-145 million and a Net Debt to EBITDA5 ratio of 1.0 or less. At current market valuation levels the Company remains focused on ways to opportunistically enhance shareholder value.

The allocation of the Company's 2025 planned capital expenditures is expected to be:

• approximately 60 percent towards the Charlie Lake core area, directed to the drilling and completion activities of 6 gross (5.4 net) wells, and infrastructure projects to support the area's long term development;
• approximately 25 percent towards the Cardium core area, directed to the drilling and completions activities of its highest return projects; and
• approximately 15 percent to infrastructure and facilities improvements, and land.

To mitigate risk and add stability during periods of market volatility, hedges have been put in place on approximately 34 percent of Bonterra's expected crude oil and 22 percent of Bonterra's natural gas production, both net of royalties, through the third quarter of 2025. The Company expects to layer on additional hedges representing approximately 8 percent of natural gas production net of royalties through the third quarter of 2025, by the end of 2024. Through the next nine months, Bonterra has secured WTI prices between $60.00 USD to $86.35 USD per bbl on approximately 1,828 bbls per day; and natural gas prices between $1.75 to $3.30 per GJ on approximately 9,121 GJ per day.

Bonterra's Budget is designed to enable the Company to responsibly manage the pace of the capital deployment and prioritize capital efficiencies in allocating capital. With the focus of debt repayment driven through Free Funds Flow allocation in 2025, Bonterra plans to regularly review the Budget and may elect to adjust the amount and timing of capital spending depending on the prevailing commodity price environment.

The rest of the press release contains tables, etc. See the Bonterra website for details.
The C$ 65-75 M budget is well below the C$ 100 M in 2024. Bonterra ranks a decent 24th out of 82 in my ranking. Bonterra should remain on course for a production of 18.2 K BoE/d in 2028 if wells in Charlie Lake perform as per expectation.